When you are considering if you should trade your car or sell it don't forget to consider sales tax.
In many states, you pay sales tax only on the "Price Difference" as opposed to the full selling price when you buy without trading.
Let's say you are buying a new car with a selling price of $25,000. If your sales tax rate is 6%, which is what it is where I live, you will pay $1,500 tax.
Now suppose the dealer is willing to give you $8,000 for your trade. Now you only have to pay $1,020 in tax, because you will only be paying tax on the "Price Difference!"
In this example, you will save $480 in tax if you trade. However if you can sell your car yourself, anything over $8,480 will be extra money in your pocket! $8,000 trade-in allowance plus the tax savings = $8,480 right? Sell your car for $9,000 and you come out $520 ahead! Sell it for $10,000 and you come out $1,520 ahead!
So don't forget to take the tax into account when deciding between trading and selling. For more information about trading and selling go to: Used Car Tips!
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